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Commitments and Contingencies | 3 Months Ended
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Mar. 31, 2017
Commitments and Contingencies [Abstract] |
Commitments and Contingencies | 17.COMMITMENTS AND CONTINGENCIES In the normal course of its business and as a result of the extensive governmental regulation of the solid waste and E&P waste industries, the Company is subject to various judicial and administrative proceedings involving Canadian regulatory authorities as well as U.S. federal, state and local agencies. In these proceedings, an agency may seek to impose fines on the Company or to revoke or deny renewal of an authorization held by the Company, including an operating permit. From time to time, the Company may also be subject to actions brought by special interest or other groups, adjacent landowners or residents in connection with the permitting and licensing of landfills, transfer stations, and E&P waste treatment, recovery and disposal operations, or alleging environmental damage or violations of the permits and licenses pursuant to which the Company operates. In addition, the Company is a party to various claims and suits pending for alleged damages to persons and property, alleged violations of certain laws and alleged liabilities arising out of matters occurring during the normal operation of the waste management business. Except as noted in the matters described below, as of March 31, 2017, there is no current proceeding or litigation involving the Company or its property that the Company believes could have a material adverse impact on its business, financial condition, results of operations or cash flows. Lower Duwamish Waterway Superfund Site Allocation Process The Company’s subsidiary, Northwest Container Services, Inc. (“NWCS”), has been named by the U.S. Environmental Protection Agency, Region 10 (the “EPA”) as a potentially responsible party (“PRP”), along with more than 100 others, under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA” or the “Superfund” law) with respect to the Lower Duwamish Waterway Superfund Site (the “LDW Site”). Listed on the National Priorities List in 2001, the LDW Site is a five-mile stretch of the Duwamish River flowing into Elliott Bay in Seattle, Washington. A group of PRPs known as the Lower Duwamish Working Group (“LDWG”) and consisting of the City of Seattle, King County, the Port of Seattle, and Boeing Company conducted a Remedial Investigation/Feasibility Study for the LDW Site. On December 2, 2014, the EPA issued its Record of Decision (the “ROD”) describing the selected clean-up remedy, and therein estimated that clean-up costs (in present value dollars as of November 2014) should total about $342,000. However, it is possible that additional costs could be incurred based upon various factors. The EPA estimates that it will take seven years to implement the clean-up. The ROD also requires ten years of monitoring following the clean-up, and provides that if clean-up goals have not been met by the end of this period, then additional clean-up activities, at additional cost, may be required at that time. Implementation of the clean-up will not begin until after the ongoing Early Action Area (“EAA”) clean-ups have been completed. Typically, costs for monitoring may be in addition to those expended for the clean-up. While three of the EAA clean-ups have been completed to date, some work remains to be done on three other EAAs. Implementation of the clean-up also must await additional baseline sampling throughout the LDW Site and the preparation of a remedial design for performing the clean-up. On April 27, 2016, the LDWG entered into a third amendment of its Administrative Order on Consent with the EPA (the “AOC 3”) in which it agreed to perform the additional baseline sediment sampling and certain technical studies needed to prepare the actual remedial design. On November 9, 2016, the EPA and the Washington State Department of Ecology (“Ecology”) conducted a public stakeholder meeting regarding the LDW Site. During the public stakeholder meeting, the EPA provided an overview of the AOC 3 pre-remedial design work and the progress of the on-going work on the EAA cleanups. At the meeting, both the EPA and Ecology estimated that the pre-design studies being performed pursuant to the AOC 3 would not be completed until the end of 2019. The next EPA stakeholder meeting is scheduled for June 14, 2017, at which time it is anticipated that more current information on the status of the cleanups will be available. In August 2014, NWCS entered into an Alternative Dispute Resolution Memorandum of Agreement with several dozen other PRPs and a neutral allocator to conduct a confidential and non-binding allocation of certain past response costs allegedly incurred at the LDW Site as well as the anticipated future response costs associated with the clean-up. The allocation process is designed to develop evidence relating to each PRP’s nexus, if any, to the LDW Site (regardless of whether that PRP is participating in the allocation process), and to determine each PRP’s share of the past and future response costs. The goal of the allocation process is to reach agreement on a division of responsibility between and amongst the PRPs so that the PRPs then will be in a position to negotiate a global settlement with the EPA. On August 16, 2016, the EPA sent individual letters to each of the PRPs at the LDW Site, including NWCS, stating that it expects to initiate negotiations with all PRPs in early 2018 relating to a Remedial Design/Remedial Action (“RD/RA”) Consent Decree. An RD/RA Consent Decree provides for the cleanup of the entire site and is often referred to as a “global settlement.” In the letter the EPA explained this schedule, noting that it expected the pre-remedial design work under the AOC 3 to be completed by the beginning of 2018, and also that it understood that several PRPs are participating in a neutral allocation which the EPA is hopeful will be completed by early 2018. The EPA encouraged the PRPs to complete the allocation on a schedule consistent with the EPA’s intended negotiation schedule, adding that it expects to initiate the RD/RA negotiations on schedule regardless of the status of the allocation. The pre-remedial design work under the AOC 3 is now not expected to conclude until the end of 2019, and in March 2017, the PRPs provided the EPA with notice that the allocation is not scheduled to conclude until mid-2019. The Company cannot provide assurance that the EPA’s schedule can be met or will be adjusted. NWCS is defending itself vigorously in this confidential allocation process. At this point, the Company is not able to determine the likelihood of the allocation process being completed as intended by the participating PRPs, its specific allocation, or the likelihood of the parties then negotiating a global settlement with the EPA. Thus, NWCS cannot reasonably determine the likelihood of any outcome in this matter, including its potential liability. Under CERCLA, certain Federal, State and Indian Tribe officials are designated as natural resource trustees and have responsibility for ensuring the restoration of injured natural resources. On February 11, 2016, NWCS received a letter (the “Letter”) from the United States Department of Commerce, National Oceanic and Atmospheric Administration (“NOAA”), describing certain investigatory activities conducted by the Elliott Bay Trustee Council (the “Council”). The Council consists of all of the natural resources trustees for the LDW Site as well as two nearby Superfund sites, the Harbor Island site and the Lockheed West site. The members of the Council include the United States, on behalf of the U.S. National Oceanic and Atmospheric Administration and the U.S. Department of the Interior, the Washington State Department of Ecology, and the Suquamish and Muckleshoot Indian Tribes (together, the “Trustees”). The Letter appears to allege that NWCS may be a potentially liable party that allegedly contributed to the release of hazardous substances that have injured natural resources at the LDW Site. Damages to natural resources are in addition to clean-up costs. The Letter, versions of which NWCS believes were sent to all or a group of the PRPs at the LDW Site, also notified its recipients of their opportunity to participate in the Trustees’ development of an Assessment Plan and the performance of a Natural Resources Damages Assessment (“NRDA”) in accordance with the Assessment Plan for both the LDW Site and the east and west waterways of the Harbor Island site. NWCS timely responded with correspondence to the NOAA Office of General Counsel, dated March 9, 2016, in which it declined the invitation at that time. NWCS does not know how other PRPs responded to the Letter, and has not received any further communication from NOAA or the Trustees. The Trustees have not responded to NWCS’ letter and NWCS is not aware of any further action by the Trustees with respect to the Assessment Plan and NRDA. At this point, the Company is not able to determine the likelihood or amount of an assessment of natural resource damages against NWCS in connection with this matter. Some work is being done with respect to natural resource damages (“NRD”) at the LDW Site. On September 22, 2016, a proposed consent decree settlement was announced between the City of Seattle (the “City”) and NOAA and the other natural resource trustees for the LDW Site. The proposed NRD settlement that the City has entered into at the LDW Site, if approved, will generally provide that the City will fund the development of restoration projects by purchasing restoration credits from Bluefield Holdings, a company that develops such projects. At this time, NWCS has not been approached by either the Council or the trustees for the LDW Site regarding participation in any similar NRD settlements. In December 2016, the Lower Duwamish Fishers Study Data Report was released, which was the first step towards developing institutional controls specific to resident fish and shellfish consumption in the area. Chiquita Canyon Landfill Conditional Use Permit Decision and Appeal On October 12, 2004, the Company’s subsidiary, Chiquita Canyon, LLC (“CCL”), filed an application with the County of Los Angeles (the “County”) Department of Regional Planning (the “Department”) for a conditional use permit to authorize the continued operation and expansion of the Chiquita Canyon Landfill. The site has been in use as a landfill since 1972, and as a regional landfill, accepted approximately three million tons of waste in 2016. The application requests expansion of the existing waste footprint from 257 acres to 400 acres on CCL’s contiguous property, increased maximum elevation from 1,430 feet to 1,573 feet, new entrance and support facilities, a facility for the County or other third-party operator to operate household hazardous waste collection events, mixed organics/composting, a land set-aside for a potential future conversion technology facility, and additional project elements. Over the ensuing 12 and-a-half years, the County conducted a lengthy permitting and environmental impact review of the application. A draft environmental impact report was released in 2014, and several chapters of that report were revised and recirculated in 2016. As required by the County, this permitting and impact review was funded by the Company at substantial expense. In advance of a public hearing held on April 19, 2017 before the County’s Regional Planning Commission (the “Commission”), the Department published recommended conditions of approval for the conditional use permit. Those conditions recommended approval by the Commission of a smaller project, which would be a reduction from the current landfill operations. In addition, the Department recommended a dramatic increase in per-ton taxes and other fees, as well as currently unquantifiable future costs that the landfill would be forced to expend at the County’s direction and discretion. CCL submitted written objections to the proposed taxes and fees and operational restrictions in the proposed permit conditions, and similarly objected at the hearing. The recommended conditions of approval raised taxes and fees the landfill must pay to the County by up to 587% compared to fees under the landfill’s existing permit. At the public hearing on April 19, 2017, CCL requested that the recommended fees be reduced, so that the increase over current fees paid to the County would be in the range of 50% to 100%. The recommended conditions of approval reduced the proposed annual limit on overall tonnage the landfill can accept from approximately three million tons to approximately two million tons. At the public hearing on April 19, 2017, CCL requested that the recommended annual limit on overall tonnage be increased to the levels at which the landfill operated in 2016, or to approximately three million tons. Lastly, CCL requested that recommended new restrictions on operating hours be eliminated, so trucks could continue accessing the landfill at off-peak traffic hours, as is the current practice. Despite these requests, at the public hearing on April 19, 2017, the Commission approved CCL’s application for an expansion of the Chiquita Canyon Landfill and a 30-year extension of its conditional use permit, but without any modifications to the Department’s recommended taxes and fees or annual tonnage limits, and with only minor revisions to the Department’s recommended operating hours. CCL intends to appeal the Commission’s decision to the County Board of Supervisors. To be timely, the appeal must be filed by May 3, 2017. The filing of an appeal vacates the Commission’s decision, which is only reinstated if the Board of Supervisors fails to act, or affirms the decision in its action. The Department has informed CCL that it expects a public hearing on the appeal at the Board of Supervisors to be held in two to three months. At that time the Board of Supervisors can approve the permit (with or without revised conditions), deny the permit, or continue the public hearing to a later date. If the Board of Supervisors approves the conditional use permit without modifications from the Commission’s approval, the Company believes the proposed tax and fee increases and operational restrictions would likely render continued operation of the site economically unviable. In addition, if the Board of Supervisors does not approve a new conditional use permit by July 31, 2017, it is possible that the landfill could be forced to close, at least temporarily, until the Board of Supervisors approves a new permit or other operational waiver. The Company is currently considering all its options concerning the conditional use permit. Depending on the outcome of the appeal, the Company may file one or more legal challenges against the County if it believes any final permit conditions approved by the County Board of Supervisors violate state or federal law. Due to the fluid nature of the permitting process at this time, the Company cannot reasonably determine the likelihood of any outcome in this matter. ﻿

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